Could the Internet of Things propel Skyworks even higher?
Skyworks Solutions is on a roll: new smartphone releases in the U.S., and advancing smartphone penetration in China, has seen demand for its components increase substantially. But smartphones aren’t the company’s only play for success – Skyworks has been looking to diversify its revenue sources, and the Internet of Things (IoT) could be just the vehicle it needs.
Skyworks’ share price is up by an impressive 37%, year to date
SOURCE: Yahoo Finance
In a sense, the smartphone market that Skyworks has ridden to glory is a forerunner of the IoT, which envisages a world where it is not just your phone, but all ‘things’ – from kitchen appliances to televisions – that are networked. The IoT is more than science fiction, we’re already seeing it develop with accessories like smart homes, virtual personal assistants, and connected cars. As high speed internet connections proliferate around the globe, and chips get more powerful, this trend is advancing at an unprecedented pace.
According to a report from tech researchers at Gartner, the number of devices connected to the internet could grow from 8.4 billion this year to 20 billion in 2020 – that’s a lot of new computer chips!
As Skyworks diversifies into new markets – winning clients like automakers and game console makers – the company looks well positioned to capitalize on the IoT. One worry investors may have is whether Skyworks will be able to compete in an industry where positive predictions suggest competition will increase. Of course, there is no way to predict the answer to that question. However, two things bode well for the chip maker: first, it’s got an advantage on people who get into the game now; and second, if the predictions are correct, the semiconductor market will be big enough for multiple companies to succeed alongside one another.
Dominion holds Skyworks Solutions in its Global Trends Ecommerce Fund.
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